Likely story

A naughty defendant forged his client's signature on a contract and tried a cash-in-hand tax scam. Unusually, it was the balance of probabilities that caught him

I first wrote about builder Nomaan Sheikh and his customers Mr and Mrs Daly in Building last year (5 April 2002). A trial had just been concluded and judgment delivered. The Dalys lost on a key point. I will tell you about it in a minute. What I didn't know at the time, and nor did the judge, was that in the few days between the close of the hearing and the judge giving his decision, Mr Daly had been thumbing through his pile of papers relating to the job. The thumbing stopped abruptly when he spotted his signature on the contract document and realised that it was not actually he who'd signed it. So, the next morning, he paid his solicitor a visit – only to find that it was too late to do anything about it – the trial was over.

A couple of days later the High Court judge handed down his conclusions. He decided that the contract in writing was between Mr Daly and Mr Sheikh's company, called Middlesex Design & Build (MDB). So any claims for defective works were to be made by the Dalys against that outfit rather than Mr Sheikh in person. And since MDB was not worth a bean, there was no point in going on to have a trial about the alleged defects. By the way, by now part of the £125,000 house extension had collapsed. Oh dear.

We are getting perilously close to a naughty piece of footwork. Mr Daly is convinced that someone forged his signature on a contract, and this document said that MDB was the contracting entity with the Dalys – and this hadn't been spotted in the trial. His solicitor wrote to the Court of Appeal. By now a handwriting expert had been called in. She had no doubt that there was something iffy about the signature. The Court of Appeal realised that if the judge at trial had had wind of this, he might well have reached the opposite result; he may have rejected the view that MDB was the other party; it might have been Mr Sheikh in person. Retrial.

The second trial was a few weeks ago. The new judge accepted the evidence of the handwriting expert. Mr Daly's signature was forged. "As to who did write the signature and date on the contract, there can be one candidate: Mr Sheikh or someone acting on his instructions." Naughty.

By now a handwriting expert had been called in. She said that there was something iffy about the signature...

The judge remarked that for an allegation of forgery, the standard of proof is high. Let me add something. The amount of proof in civil cases is still "the balance of probabilities"; which is to say, on the evidence, the occurrence was more likely than not. It is not proof beyond doubt. And the more serious the allegation, the stronger the evidence needed to tip the balance of probabilities. A seriously naughty piece of footwork requires fairly strong evidence.

Now then, back to the Dalys and Mr Sheikh. Although satisfied that someone had forged Mr Daly's signature, the court didn't feel it could therefore conclude that Mr Sheikh contracted in person. So the court embarked on an investigation into the circumstances notwithstanding the forgery.

First, it seems that Mr Sheikh's company, MDB, sent no invoices or receipts to the Dalys. Then the judge enquired into where the money paid went. That was by no means clear from the company's bank statements. Only small amounts had gone in, yet the Dalys had handed over huge cash sums. The private accounts of Mr Sheikh showed some cash in, but were not conclusive; and whose bright idea was the agreement that all payments be in cash? Cash was an "obvious and considerable advantage to [Mr Sheikh]", said the judge. "I therefore have no difficulty in finding that the proposal … came from Mr Sheikh. I find his purpose was to avoid the payment of income tax and, if the Customs and Excise caught up with his company, VAT."

Postscript

Tony Bingham is a barrister and arbitrator specialising in construction. You can write to him at 3 Paper Buildings, Temple, London EC4 7EY, or email him on info@tonybingham.co.uk.